Should Chief Digital Officer Lead Digital Transformation?

Companies ahead of the digital curve are more likely than their peers to have at least two C-level executives leading digital transformation efforts.

In order to leverage cloud computing, mobile technology, social media, Big Data analytics and other emerging technologies, many companies are involved in sweeping "digital transformation" initiatives.

Given the importance of such initiatives, organizations need strong leaders to make them work. Yet a study by the Economist Intelligence Unit shows organizations use a number of different approaches to leading digital transformation efforts.

Two Digital Transformation Leaders Better than One

Most of the companies surveyed considered the job too big for a single person. According to the EIU, at least two C-level executives share digital transformation leadership responsibilities at 59 percent of respondent companies. The shared C-level executive model is more common among companies that identify themselves as ahead of the curve in digital transformation, with 65 percent of self-identified leader companies using it, compared to 49 percent of other companies.

The key takeaway is that leadership does not sit with a single person, said Don Schuerman, CTO of Pegasystems, one of the sponsors of the study. And no matter who does the leading, he added, they must be good at driving change throughout an organization.

"Digital transformation is often led by the CMO or CIO role, but the focus should be broader than that," he said. "There should be ownership with multiple functional leaders across an organization or ownership all the way up to the CEO."

A CTO or CIO was the most common executive to assume leadership of digital transformation initiatives, mentioned by 52 percent of respondents, followed by the CEO (37 percent) and chief operating officer (28 percent), the study found.

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Twenty-one percent of companies had appointed a chief digital officer (CDO). Doing so "signals a way to say that digital transformation is hugely important," Schuerman said. "The CDO or head of digital or whatever you call that role becomes a way for you to sign post the importance of digital to the rest of the organization."

The study revealed some other interesting insights.

Outside Expertise

Companies that identified themselves as digital transformation leaders were more likely than their laggard peers to seek digital transformation capabilities outside their own organizations, for example. Fifty-one percent of leaders had outsourced digital processes to third parties, compared to 38 percent of other companies. Leaders were also more likely than laggards to have invested in digital startups (48 percent, vs. 16 percent), formed partnerships or joint ventures (38 percent vs. 25 percent) or made a merger or acquisition (31 percent vs. 12 percent).

"Digital is defined by the expectations of your digital customer and organizing your business around those expectations," Schuerman said. "That will probably entail disrupting a lot of your existing processes. Someone from the outside looking in can often better enable that disruption."

A Better Omni-channel Experience

While 32 percent of respondents said their companies offered customers a "seamless" experience across all digital and traditional channels in the pre-purchase stage, the number fell to 22 percent during a purchase and 15 percent following a purchase.

"The customer experience is better in the pre-purchase stage than during the purchase and better during the purchase than post-purchase, even though we have more information about a customer in the post-purchase stage," said David Steuer, the Pegasystems global practice lead at Accenture, another sponsor of the study. "Companies ahead of the curve are looking at automating processes end-to-end, going beyond the initial digital marketing efforts and looking at how to bring this omni-channel experience together for their customers."

"Simplification" is a term used by both digital laggards and digital leaders, Schuerman said, although their goals for simplification are somewhat different.

"The goal around simplifying internal processes used to be all about cost reduction, but in the digital age the goal is make the customer experience easier. My processes need to be simple enough that my customers and my partners can interact with them without getting lost," he said. "Digital is not just about setting up a digital channel or a mobile channel, but about simplifying so that when I expose my processes to my customer the processes work in a way that make the customer experience easy."

Ann All is the editor of Enterprise Apps Today and eSecurity Planet. She has covered business and technology for more than a decade, writing about everything from business intelligence to virtualization.